Practical Management Science
Practical Management Science
6th Edition
ISBN: 9781337406659
Author: WINSTON, Wayne L.
Publisher: Cengage,
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A producer makes a product at a constant cost of $60 per unit and sells to a
retailer at a wholesale price of $70, offering a buyback price (B). The retailer sells
the product at $100 per unit, and each unsold unit is sold back to the producer at
the buyback price (B), retaining a salvage value of $50. Demand for the product
is random, following a normal distribution with a mean of 3000 and a standard
deviation of 300. What value of the buyback price (B) will coordinate the supply
chain?
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Transcribed Image Text:A producer makes a product at a constant cost of $60 per unit and sells to a retailer at a wholesale price of $70, offering a buyback price (B). The retailer sells the product at $100 per unit, and each unsold unit is sold back to the producer at the buyback price (B), retaining a salvage value of $50. Demand for the product is random, following a normal distribution with a mean of 3000 and a standard deviation of 300. What value of the buyback price (B) will coordinate the supply chain?
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